Or, why Groupon sucks…

We all love to get great deals. But it's one thing to take advantage of them personally, and another entirely to take your spa down the slippery slope of discount oblivion. It can be tempting, especially when you see your competitors doing it, to start throwing some ridiculous discounts out into the marketplace.

The current craze in discounting devils are new websites like Groupon and BuyWithMe. They sign up a small spa, restaurant, etc. to sell coupons at a steep discount:

Balani Custom Clothiers Inc., a Chicago men's suit and shirt tailor, offered a promotion through Groupon where, for one day in October, consumers could spend $95 on a gift certificate from the tailor shop valued at $225 that's redeemable for up to one year. But at least 50 cards needed to be purchased for any to become valid … "We were all over Twitter and Facebook that day," says owner Sonny Balani … Still, Balani paid a hefty price for the exposure—50% of the earnings generated from the promotion went to Groupon—which means the tailor received just $47.50 per gift certificate sold. —Wall Street Journal

It's great for exposure if the deal is really good, but it also stays out there forever. Every future client entertaining coming to your spa will know that you're willing to sell your services for dirt cheap. Why should they pay the full price that your services are worth? Discounts only work in one direction and only from some established value. Once you are exposed as a discount seller, you have lowered the value of your brand and begun your slide. Sites like Groupon feed on nice local brands like the devil. You get exposure, they get your soul.

Instead, use intelligent discounting that rewards loyal clients or is likely to generate repeat clientele. BOGOs are one of my favorite techniques: you sell your services at full price, with the added bonus of an additional, small gift certificate which generates an additional visit to your spa (and an almost guaranteed upsell).

52 Responses...

…and I have to disagree with David Rangel's comment that most Groupon customers are not "spa hoppers." If I had $10 for every person who told me they get regular massage via whomever is offering a Groupon, I could take my family on a nice, very nice weekend away.

In fact, this is funny, we had a guy call our business, and tell us he missed the offer, but could he come in for the Groupon price! Sadly, he was allowed to (but heck, we made more off that than we would have through Groupon)… and when I asked who his regular service provider was, the response was "I watch for coupons, deals, promotions, etc…"

When I reminded one woman who told me this, (I knew her former, regular therapist, a highly skilled practioner)…that at least with her steady therapist, she knew what she was getting…she told me it didn't matter, with Groupon she could get 2 massages for the price of one…

I came online to see what others thought of these daily deals as I have found it the worst business decision I ever made. I have been in business for 15 years and have a great clientele. I was told and believed it would be a great way to get new clients and advertise. WRONG. I got the worst of the worst, people who do not return because they go on to find another half price deal. They also were lousy tippers because they knew they would be back. I have never had a bad review online or anywhere else in 15 years, these people cannot wait to complain to everyone even when it is not true. HINT: When you read a review and they mention they got a daily deal, ignore it. More than one who never stepped foot in my place left bad reviews because they were mad about not getting in. One example a lady whose mother bought the voucher. Vouchers state the rules and one is that the person purchasing is the ONLY one who can use it. Well I TRIED TO BE NICE and let her daughter use it and when she did not show, I told her ( which is also on the voucher) that if anyone cancels without 24 hour notice they have to pay voucher price to reschedule. She had a fit promising to RUIN ME when I told her this, she went online for the world to see.
I had another one who came in and when I went to redeem found she had been refunded !
People were late without a phone call were mad when they got 45 minutes instead of the hour because they feel untitled. Sorry, I am not making anyone wait because you are late.
I have had experiences that I have never had in 15 years and I suggest to anyone becuae I know several business owners who had same experience that you run from these deals. These companies make millions while we do all the work, deal with ridiculous client demands and make NO money. They take more than half because they charge credit card fees which all use to pay them. They also call you with every complaint so you are getting double the phone calls which you don't want during your work day.
This is the worst thing to happen to the small business person in this economy !
Keep your regulars happy, they pay full price plus tip, show up on time, or call if they can't. Refer their friends. Keep coming back and happy to spend the money. Why would you look for the exact opposite ? RUN FROM THESE DEALS !!!